An Illusion about Taxes
Clayton Morgareidge, for the Old Mole Variety Hour, July 20, 2009
Two publications that represent our ruling elite are the Wall Street Journal and The Economist. They are both outraged by the congressional Democrats’ healthcare plan for, among other things, the tax burden it would impose on their constituency. “The Democrats want to ram through one of the greatest raids on private incomeand business in American history,” screams an editorial in The Wall Street Journal . The Economist grumbles that “the House bill hopes to achieve near-universal health coverage by soaking the rich.” So this seems like a good moment to think about taxes.
Soaking the rich is something the rich (with a few notable exceptions) see as a bad thing. But should the rest of us see it as a good thing? Should we join up with Robin Hood to steal from the rich and give to the poor? But whether we think soaking the rich is good or bad, either way we buy into the illusion that the rich actually own their wealth. In their book The Myth of Ownership: Taxes and Justice, Liam Murphy and Thomas Nagel try to expose this illusion.
A more moderate, but just as cynical, a view of taxation is the common saying that nothing is inevitable but death and taxes. Taxes are a necessary evil. But what makes people resent paying taxes, even when they would agree that they could not live without the benefits of government? According to Murphy and Nagel, it’s because we suffer from an illusion that is inevitable in our economic system, the illusion that that our gross income, what appears at the top of our pay stubs, or on the deposits that go into our bank accounts from investments, is our own private property, and that the taxes we must pay are taking away from us something that is rightfully ours. We may agree that it has to happen, but we nevertheless feel that we have paid out something that was, if only fleetingly, our own.
Well, you might ask, why shouldn’t I think of it that way? I earn X amount of dollars, that’s my salary, and some of that is taken away from me and sent off to Salem and Washington DC, leaving me with less than I had.
…individual citizens don’t own anything except through laws that are enacted and enforced by the state. Therefore, the issues of taxation are not about how the state should appropriate and distribute what its citizens already own, but about how it should allow ownership to be determined (176).
We have to think of property as what is created by the tax system, rather than what is disturbed or encroached on by the tax system. Property rights are the rights people have in the resources they are entitled to control after taxes, not before (175).
Many liberals have basically given up too much philosophical ground when we talk about taxes. The truth of the matter is that that is wealth that all of us have created, and what we’re doing is taking it in a way that it needs to be used rather than letting it be frittered away by those who have it. Another way to put is that the wealth that the very wealthy have – a much higher percentage of that is not earned or deserved than the income and wealth of those of us who have less.